[Draft Motion] Remove Tier 6 (NSR Sales) from the network’s liquidity operations

[Sentinelrv]

and we’re already offering interest rates that greatly exceed most any other economic system out there. I think it’s very clear that park rates are ineffective at garnering nbt demand.

I’m not so sure about that. Have you been reading this discussion thread starting here?

Why are tier 5 and 6 (park rates and NSR sales) only being partially utilised?

Have these rates been advertised in Poloniex's chat room, or are we assuming they already know about it? Just because people park doesn't mean that the NuBits were bought from an exchange. They may have been sitting in a wallet up until now, which does us no good and wastes money. We need people at exchanges to know about the rates, so they can buy.

In that thread I’m talking about the fact that shareholders are afraid to advertise parking rates because the interest rates seem abnormally high to the point they would scare people away rather than encourage them to park. The thing is though that we’re not advertising the correct rates. We’ve been advertising APR, which is a yearly rate. If we’re advertising an APR rate of 50% for parking 22.8 days, that is only 3.13% interest for a single park period. If somebody parks, then they’re not going to receive 50% interest. Nu will only end up paying out 3.13%, which is significantly smaller than we’re making it appear in our advertising. 50% interest sounds fishy and unsustainable, where 3.13% does not.

We could be doing multiple things wrong here. We could be assuming that NuBits users already know about the park rates by looking at their clients. They may not be looking at their client or even know about the raised rates. Shareholders may not be advertising park rates for fear of causing panic selling like @Cybnate mentioned, so few people may even know about the opportunity to park. And shareholders would fear advertising because they’ve been using the wrong rates to begin with, which are crazy high.

We should only be advertising interest rates that people will actually receive in a given park period. Anything beyond that gives you crazy high percentages which Nu won’t have to pay out anyway, unless shareholders were to hold parking rates at the same level for an entire year, allowing people to park many multiple times. For example, on Poloniex chat we should be saying something like the following: “Nu is offering 3.13% for a 22 day park period.” Not Nu is offering 50% APR to park NuBits. It’s not true because they won’t receive 50% interest when their park period is up and it most likely scares people away. Please read the discussion I linked. I go into it a lot more. I feel like we’ve been going about the advertising of park rates all wrong, which could be one of the reasons they’re not as effective right now.

[Cybnate]

Once the FLOT NSR reserve runs out, I hope shareholders are wise enough, act responsibly and grant FLOT with fresh NSR to have them sold.

Supportive of that, although I hope the 25m would be adequate. I would encourage Shareholders to buy Shares just now. Just see it as an additional ICO to kickstart liquidity operations and pay for the ongoing operations and developments we all voted for. And they are cheap! I just bought a few at least to compensate the dilution created by the sales. Buy low, sell high they say.

[Sentinelrv]

I agree that trying to store our reserves in NuShares has ultimately failed, however I am hesitant to abandon the current tier 6 right at this moment due to the fact that we still need to build our tier 4 buy side reserve back up. Bitcoin reversing course doesn’t necessarily mean that people will come back to NuBits when they see what our current situation is. If they see that we are taking the necessary steps through NSR sales to build our reserve back up, then they may be more willing to come back to NuBits if Bitcoin reverses in price.

The best time in my opinion to discontinue tier 6 may be after we build our reserve back up and we no longer need to sell NuShares. Our increased tier 4 reserve will provide a larger buffer, which means park rates won’t need to be used as much. We surely wouldn’t need to jack the rates up as high as we have them right now. At the moment though we have no tier 4 buffer, which is why parking rates need to be so high. Once that reserve gets built back up through NSR sales, then we can rely on tier 4 and parking rates more and discontinuing tier 6 would make more sense. In the present situation though we unfortunately need it.

There is also the possibility the reserve could be filled by offering other products like our presently planned pegs to the Euro, Yuan and SDR or the potential fixed supply currency, but I fear the market may reject these new products if we offered them now because of our current financial situation. Again, NuShare sales would be the only way to get us back on stable footing to the point where the market can trust us enough again to accept and purchase our new products. So once again, I think we need tier 6 right now, but later on after our reserve has been increased we can remove it. Unfortunately, it most likely means some NuShare dilution until the point comes where we don’t need it anymore.

[Sentinelrv]

I would encourage Shareholders to buy Shares just now. Just see it as an additional ICO to kickstart liquidity operations and pay for the ongoing operations and developments we all voted for. And they are cheap! I just bought a few at least to compensate the dilution created by the sales. Buy low, sell high they say.

This is what I have been doing to support the network. I bought around 333k the other day not only to get cheap NuShares, but to help support the price in the face of the sales.

[Sentinelrv]

@tomjoad, I have a question about your actual motion text here…

Tier 6 (NSR Sales) will be removed from the network’s liquidity operations. Tier 5 (Parking Rates) will be the final line of peg defense unless new Tiers are introduced through future motions.

Are you speaking about tier 6 only in the context of defending the peg in low demand cycles as a final line of defense? What about high demand cycles? I see you wrote this below it…

This motion will make NuShares (NSR) more desirable to own because of the predictable and limited nature of any future supply increases.

Are you speaking here of minting rewards or actually using NuShare sales in a limited way other than as a last line of defense? For example, let’s say we use tier 6 in this instance to get back on track with our tier 4 reserve. After tier 4 is filled, we pass this motion to discontinue use of tier 6. Afterwards, Nu hits good times again and the NuShare price is higher than ever. During these good times, would this motion allow or prevent us from being able to sell NuShares in order to tap our higher market cap for things like filling our reserve even higher or gaining funding for other projects?

We have always sold NuShares when we’re in low demand cycles and at the bottom of our market cap, but never when it’s high where we could use it to benefit us. Does your motion prevent us from being able to do this? If not, it might be best to spell this out more clearly in the motion text.

I have heard others voice this concern as well, so I wanted to make sure it was clear.

[mhps]

I agree that trying to store our reserves in NuShares has ultimately failed

I think this conclusion is too early. Buyback did push up share price significantly. That memory is still in many people’s mind. Knowing that there will be buyback someday encourage people to buy.

[Sentinelrv]

I think this conclusion is too early. Buyback did push up share price significantly. That memory is still in many people’s mind. Knowing that there will be buyback someday encourage people to buy.

Nagalim also said this about it…

[Draft] motion to increase the percentage of reserves

Proof is in the pudding. The question is how many shares does it take to right the ship and if it is more or less than the burned shares.

[mhps]

I think it is a matter of fine tuning rather than throw Tier 6 out f the window.

[jooize]

Park rates don’t remove NBT from the market, on the contrary: they create additional.

I bet you know this and refer to the end result, but parking removes NuBits from the market until unparked, which could be enough time and opportunity for the network to improve beyond the cost of interest. I haven’t understood if that’s how we can use them now, though.

I agree that trying to store our reserves in NuShares has ultimately failed,

I think this conclusion is too early.

Concur.

FLOT NSR Operations (buy side)

Assuming Nu regains liquidity and begins keeping larger reserves (or otherwise improves the issue), then NuShares at moments such as this may become seen as the investment opportunity we believe it to be.

NuShare sales in combination with buybacks should work a lot better when demand is where I believe it should be, by how I value Nu. Have we been in this bad a situation before? I imagine our current lack of liquidity doesn’t make us attractive to invest in while we also continue applying downward pressure on the shares they’d buy.

As long as NuBits keeps surviving using NuShare sales, Tier 6 should function? Or am I thinking faultily? We need to survive to prove that it works, and need investors to risk their funds until proven.

[mhps]

Agree.

NuShare sales in combination with buybacks should work a lot better when demand is where I believe it should be, by how I value Nu.

I tend to think auction is better than forced selling NSR on the market.

[tomjoad]

Afterwards, Nu hits good times again and the NuShare price is higher than ever. During these good times, would this motion allow or prevent us from being able to sell NuShares in order to tap our higher market cap for things like filling our reserve even higher or gaining funding for other projects?

This motion would strictly be limited to diluting NSR for the purposes of peg defense.

To your first point, if NuShares are in “good times” that means that NuBit sales are robust. This means there should be no need for NSR dilution to increase Tier 4 reserves, because the network can simply retain more of the proceeds of NBT sales.

To your second point, any NuShare dilution that isn’t accompanied by a corresponding increase in another asset will destroy our market capitalization. This should be obvious to all shareholders by now. Diluting NSR to raise funding for other projects may not impair the market cap when shareholders receive an asset in return, such as the original offer to receive BKS in exchange for NSR. I would support NSR dilution in that instance.

Smart shareholders see that we haven’t committed to making their assets scarce and valuable, and so they continue to sell. $0.001464 per NSR now.

[MaVo]

Smart shareholders see that we haven’t committed to making their assets scarce and valuable, and so they continue to sell. $0.001464 per NSR now.

This is one of the most misleading statements I have ever read on this forum.

[tomjoad]

This is one of the most misleading statements I have ever read on this forum.

I would encourage you to expand on this statement, as it’s not very helpful for understanding your disagreement with it.

[MaVo]

I was thinking about asking you to elaborate on your statement, but I decided it doesn’t make much sense to ask for something that I can make up myself.

[jooize]

I don’t get it. NuShares can undeniably be considered lacking in scarcity because of Tier 6. Whether NuShare sales is a good idea many disagree about, and how valuable NuShares can be in either case is debatable, but I find it easier to see and more intuitive for NuShares to be more valuable without NuShare sales, assuming Nu is stable.

Is the misleading part that the cause of NuShares’ market value could be solely from Nu’s NuShare sales and not from other shareholders selling?

[Nagalim]

Nu is stable

Selling shares is a stabilization mechanism. Of course selling shares when the system is already stable would drop the price. As would not selling shares when the system isn’t stable.

[jooize]

Discontinuing NuShare sales for that potential relies on Nu being able to function without them, which I assume @tomjoad believes is possible.

I do not understand how we would get US NuBits back on track without NuShare sales, or a rise in NuBit sales. Simply with Park Rates (Tier 5) to motivate NuBit sales?

[Sentinelrv]

To your first point, if NuShares are in “good times” that means that NuBit sales are robust. This means there should be no need for NSR dilution to increase Tier 4 reserves, because the network can simply retain more of the proceeds of NBT sales.

Selling a limited number of NuShares in good times rather than bad times is an idea that @Sabreiib posted about a couple days ago.

I see what you’re saying, but I can think of a reason for it. Tier 4 reserves may be high because of high NuBit sales (meaning there may not be an urgent need for NSR sales), however every month we have expenses: development on the core protocol, NuDroid updates, contractor expenses, especially the high cost of liquidity provision. All these expenses are paid out in NuBits, which are not backed by Bitcoin from actual sales. Selling a limited amount of NuShares during good times may help to make up some of the money we put out to keep the network running. This would be done because final revenue through transaction fees is still too low to pay for the monthly expenses we have. I’m not talking about a lot (like $100-200k), just a limited amount which wouldn’t destroy the NuShares market cap.

[dysconnect]

To support Nu’s main product there isn’t much choice beyond trying to sell NSR. As I said before, if we don’t allow selling NSR for peg defense then there is also no reason for buyback either. Fundamentally we need a way to earn revenue from NBT volume and also capitalize on our market influence - when times are good, of course. I asked for revenue sharing with NuLagoon but they didn’t like it; it’s not an easy job and my only hopes are on BCE.

[Sentinelrv]

Do companies in the real world do what I’m talking about above, issue limited amounts of new shares during good times in order to raise capital for something?